The homestead tax exemption applies to property taxes. It’s generally a dollar amount or percentage of the property value that is excluded when calculating property taxes. The amount or percentage depends on the state, as does who is eligible for the exemption. In some states, every homeowner gets the tax exemption, while in other states, eligibility depends on income level, property value, your age or if you’re disabled or a veteran. One thing that is true in every state that has a homestead tax exemption, however, is that the home has to be a primary residence. Most states offer the homestead tax exemption.
Taxes are one of many factors to keep in mind when you become a homeowner. Consider working with a financial advisor who can help you manage the financial aspects of homeownership.
How Property Taxes Work
If you’re not familiar with property taxes, here’s a quick refresher. The value of your home will be assessed, and then a property tax rate will be applied to that assessed value. You can appeal the value if you think it’s too high, but in general property tax bills are what they are.
Property tax rates fluctuate according to the decisions and needs of the tax authorities in your area. If the city decides it needs more funds, property tax rates may increase. Sometimes, residents can vote on these rate changes and in other cases the decision is made with public input but doesn’t require public consent.
How Homestead Tax Exemptions Work
Homestead tax exemptions shelter a certain dollar amount or percentage of home value from property taxes. They’re called “homestead” exemptions because they apply to primary residences, not rental properties or investment properties. You must live in the home to qualify for the tax break. Some states exempt a certain percentage of a home’s value from property taxes, while other states exempt a set dollar amount.
If your state uses a percentage method, the exemption will be more valuable to homeowners with more valuable homes. If your state uses a flat dollar amount for its exemption, the exemption will be more valuable to homeowners with less expensive homes.
Ready for an example? To keep things simple, let’s say the assessed value of your home is $200,000 and your property tax rate is 1%. Your property tax bill would equal $2,000. But if you were eligible for a homestead tax exemption of $50,000, the taxable value of your home would drop to $150,000, meaning your tax bill would drop to $1,500.
Who’s Eligible for the Homestead Tax Exemption?
In some states, you’ll get the homestead exemption (or a bigger one) if your income is low, you’re a senior, you have a disability or you are a veteran. In most cases, these exemptions can’t be combined if you fall into more than one category. Some states also set an upper limit on the value of homes that can qualify for exemptions.
State governments can’t directly affect property tax rates because rates are set at the local level. So statewide homestead tax exemptions are a way for state governments to lower property tax bills indirectly. They do this to encourage homeownership, keep residents happy and give a property tax discount to people in need of a tax break.
Which States Have the Homestead Tax Exemption?
Most states have homestead exemptions, though they may not be homestead tax exemptions. States that have general homestead laws (e.g., to protect surviving spouses from creditors) may be included in the count. Every state except Delaware offers some kind of property tax relief for veterans or disabled veterans.
The table below breaks down many of the available exemptions in all 50 states (and Washington D.C.). Make sure you check on the government websites periodically to keep up with any changes that could affect your eligibility.
|Homestead and Other Property Tax Exemptions|
|State||Type of Exemption||Eligibility and Limits|
|Alabama||Homestead Exemptions||Qualifying homeowners under 65 get up to $4,000. Age 65 and older have no exemption limit.|
|Alaska||Property Exemptions||Qualifying homeowners, including disabled veterans and seniors can get from $50,000 to $150,000 based on the value assessment of their home.|
|Arizona||Senior Valuation Protection||Qualifying homeowners age 65 and older based on adjusted gross income and years of ownership.|
|Arkansas||Homestead Tax Credit||Qualifying homeowners can get property tax credit up to $375 per year. Additional credits for seniors 65 and older, and the disabled.|
|California||Homeowners’ Exemption||Qualifying homeowners can get up to a $7,000 reduction based on the assessed value of their home and primary residence.|
|Colorado||Homestead Exemption||Qualifying seniors and disabled veterans can up to 50% of the first $200,000 of the value of their home.|
|Connecticut||Veterans Property Tax Exemption||Qualifying veterans can get a $1,500 property tax exemption. Additional exemptions based on income and disability.|
|Delaware||Senior School Property Tax Relief||Qualifying seniors 65 and older can get 50% (up to $400) credit against school property tax for their primary residence.|
|Florida||Homestead Exemption||Qualifying homeowners can get a tax exemption that reduces the tax value of their property up to $50,000.|
|Georgia||Homestead Exemption||Qualifying homeowners can get $2,000 deducted from 40% of the assessed value of their primary residence. Age 65 and over can claim $4,000, and disabled veterans could get a $60,000 exemption.|
|Hawaii||Home Exemption||Qualifying homeowners can get up to $100,000 deducted from the assessed value of their home. Exemptions increase based on age, and can be claimed by seniors, the disabled and veterans.|
|Idaho||Homeowner’s Exemption||Qualifying homeowners can get 50% the value of their primary residence (up to $100,000) deducted from property tax. Disabled veterans can claim other reductions.|
|Illinois||Homestead Exemptions||Qualifying homeowners can claim $6,000 to $10,000, depending on the county for their primary residence. Additional exemptions exist for seniors, the disabled, veterans, improvements, and natural disasters.|
|Indiana||Property Tax Deductions||Qualifying homeowners can get a 35% exemption of the assessed value of a home up to $600,000 (25% for homes over $600,000). Additional deductions are available for seniors, veterans, disabled persons, rehabilitations, and mortgages.|
|Iowa||Tax Credits and Exemptions||Qualifying homeowners can get a credit that “is equal to the actual tax levy on the first $4,850 of actual value.” Additional credits and exemptions are available for seniors, families, veterans, and the disabled.|
|Kansas||Homestead Refund||Refunds are available for homeowners who have resided in the state at least one tax year, and earned less than $36,300.|
|Kentucky||Homestead Exemption||Exemptions are based on age, disability, and veteran status. Qualifying homeowners can deduct $39,300 (for 2019-2020) “from the assessed value of the applicant’s home and property taxes are computed based upon the remaining assessment.”|
|Louisiana||Homestead Exemption||Qualifying homeowners can get a tax exemption up to $75,000 for their primary residence. Additional exemptions are available for veterans.|
|Maine||Property Tax Exemptions||Qualifying homeowners residing in Maine for at least 12 months can get a $25,000 exemption for their primary residence by April 1. Additional exemptions are available for veterans, the blind, renewable energy, and business equipment.|
|Maryland||Property Tax Exemptions||Exemptions are available for qualifying military veterans and the surviving spouses of military personnel who were killed while serving.|
|Massachusetts||Property Tax Exemptions||Exemptions are available for qualifying seniors, veterans and their surviving spouses, the blind, the surviving spouses of firefighters and police, and others others facing “hardship due to age, infirmity, & poverty.”|
|Michigan||Property Tax Exemptions||A variety of tax exemptions are available for disabled veterans, air pollution, redevelopment, nonprofit housing, new properties, and other programs.|
|Minnesota||Property Tax Programs||Tax reduction programs are available for the blind and disabled, seniors, veterans, disaster relief, and pollution control, and other qualifying benefits.|
|Mississippi||Homestead Exemption||Qualifying homeowners can get an exemption for the first $7,500 of the assessed value of their home. Additional exemptions are available for seniors, the disabled, the blind, and veterans.|
|Missouri||Property Tax Credit||Qualifying seniors and disabled persons can get up to $750 in credit for rent and a maximum of $1,100 for the primary residence of homeowners.|
|Montana||Property Tax Assistance Program (PTAP)||Exemptions are based on filing status and adjusted gross income. The exemption is limited to the first $200,000 of the market value of a primary residence.|
|Nebraska||Homestead Exemption||Qualifying homeowners include seniors over 65, the disabled, and veterans and their surviving spouses.|
|Nevada||Personal Exemptions||Exemptions are available for qualifying veterans, surviving spouses, and blind persons.|
|New Hampshire||Property Exemptions and Tax Credits||Tax credits are available for qualifying veterans, surviving spouses, the blind, the deaf, and the disabled, ranging from $50 to $4,000.|
|New Jersey||Homestead Benefit||“2017 Homestead Benefit payments will be paid to eligible taxpayers beginning in May 2021.”|
|New Mexico||Head of Family Exemption||Homeowners can get a $2,000 reduction on the taxable value of their residence as long they are the head of family and a New Mexico resident.|
|New York||Property Tax Exemptions||A variety of exemptions are available for seniors, veterans, persons with disabilities, and agricultural properties. Homeowners earning less than $500,000 can qualify for the School Tax Relief (STAR) credit.|
|North Carolina||Homestead Property Exclusion/Exemption||Qualifying residents age 65 and over or permanently disabled whose 2020 income is less than $31,500 can get an exemption for either $25,000 or 50% of the appraised value (whichever is greater) of their primary residence.|
|North Dakota||Tax Exemptions, Credits and Refunds||Homeowners 65 and over, or disabled individuals earning less than $42,000 can qualify for a credit. Additional credits, refunds, and exemptions are available disabled veterans and other applicants.|
|Ohio||Homestead Exemption||Homeowners who are seniors or persons with disabilities who earn less than $34,200 in 2021 can get an exemption up to $25,000.|
|Oklahoma||Homestead Exemption||Qualifying homeowners can get an exemption of $1,000 off the assessed valuation of their residence, which could reduce $87 to $134.|
|Oregon||Property Tax Exemptions||Oregon has over 100 exemption programs for veterans, seniors, and people with disabilities.|
|Pennsylvania||Homestead Tax Exemption||Qualifying homeowners can get a property tax reduction for their primary residence.|
|Rhode Island||Tax Assessors Exemptions||Exemptions are available for seniors, people with disability, veterans, the blind, and people facing economic hardship. The “property value will be reduced by 40% , taxed by residential rate of $24.56.”|
|South Carolina||Homestead Exemption||Homeowners over age 65, disabled, or legally blind can qualify for an exemption on the “first $50,000 in Fair Market Value” of their primary residence.|
|South Dakota||Relief Programs||A variety of tax exemptions are available for the elderly, disabled and veterans. The Homestead Exemption Program delays the payment of property taxes for single members earning less than $16,000 and joint members earning less than $20,000.|
|Tennessee||Property Tax Relief||Eligible applicants include elderly and disabled earning earning less than $30,700 can get up to $29,000 exemption. Disabled veterans and surviving spouses can get an exemption on the first $175,000 of their home’s market value.|
|Texas||Property Tax Exemptions||Qualifying homeowners can get a $25,000 exemption, but some school districts can limit the exemption to 20% of the property’s appraised value. Additional exemptions are available for seniors, persons with disabilities, solar and wind-powered energy, and charitable organizations and businesses.|
|Utah||Primary Residential Exemption||Qualifying homeowners can get a 45% exemption on the fair market value of their primary residence and up to one acre of land.|
|Vermont||Homestead Declaration||Qualifying homeowners must file the annual homestead declaration for their primary residence by April 1.|
|Virginia||Disabled Veterans Real Estate Tax Exemption||Qualifying veterans and surviving spouses can get a real estate tax exemption.|
|Washington||Property Tax Exemptions and Deferrals||Tax exemptions are available for seniors, people with disabilities, homeowners with limited income, veterans and their surviving spouses, as well as nonprofit organizations.|
|Washington D.C.||Homestead, Senior, and Disabled Deductions||Qualifying homeowners get deductions based on age, adjusted gross income, and primary residence.|
|West Virginia||Property Tax Exemptions||Homeowners age 65 and older, and persons with disabilities, can get an exemption for the first $20,000 of their primary residence.|
|Wisconsin||Property Tax Relief Credits||Qualifying homeowners can get a property tax credit for their primary residence.|
|Wyoming||Tax Relief||Qualifying veterans can get a $3,000 refund for the assessed value of their primary residence. Additional tax deferrals and refunds are available for other eligible applicants.|
If you qualify, a homestead tax exemption can be a much-needed boon to your budget. Be sure to comply with state and local rules for claiming the tax exemption. If an application is required, submit your application for a homestead exemption in a timely manner. In some counties, scammers have fraudulently requested payment for filing these applications, so be aware. For applications and issues related to homestead tax exemptions, go directly to your county or local tax assessor.
Tips for New Homebuyers
- Owning your home is a big financial step to take. A financial advisor can work with you to set and reach your homebuying goals. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors in your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- If you’re looking to make the switch from renter to owner, you may want to know about loan programs for first-time buyers. Generally, they are meant to help people with less- than-excellent credit scores or those who can’t make 20% down payments.
- If you want to know how much house you can afford, SmartAsset’s free homebuying calculator can help you breakdown mortgage payments, property tax, insurance, and other costs based on your income, location, and other relevant financial information.
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